An SEC Statement on Restatements

restatements

The top accountant at the Securities and Exchange Commission wants corporate executives and audit committees to do better at evaluating when financial restatements are necessary, saying that too many tilt their analysis toward the conclusion that, nope, that error we had last quarter doesn’t need to be restated after all.  Paul Munter, the SEC’s acting…

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Notes on Assessing Your Internal Controls

internal control

One of the Securities and Exchange Commission’s senior enforcement officials gave a pep talk in Washington this week about the importance of internal controls, and how a company should evaluate its internal controls this winter as the world tries to prevail over the disruptions of covid-19. The official was Matthew Jacques, chief accountant in the…

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More SEC Talk on Cyber, Internal Control

internal control

Before this particular bit of news sails downstream, internal control professionals might want to note that an SEC commissioner spoke this week about the importance of internal controls for cybersecurity. She raised a few points worth considering. The remarks came from Caroline Crenshaw, a Democratic appointee to the Securities and Exchange Commission who, in my…

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Another Example of Spreadsheet Risk

spreadsheet

We missed this until now, but a Radical Compliance fan passed along this item for all you internal accounting control enthusiasts: a water development business in Colorado that recently had to correct its financial statements because of sloppy spreadsheet controls. The company in question is Pure Cycle Corp. ($PYCO), which sells water and wastewater services…

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SEC Straps Leather Company on Control Failures

The Securities and Exchange Commission has charged a Texas leather goods company with failing to maintain an effective inventory accounting system, which ultimately led the firm to restate two years’ worth of financial results and send its CEO packing. It’s a cautionary tale for the rest of us about how a poor control environment can…

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The Second Act of SPACs Enforcement

Last week the Securities and Exchange Commission took its first enforcement action against a special purpose acquisition company (SPAC), in a case involving poor due diligence and misleading disclosures to investors. We should expect more such cases in the future, but there’s also another realm of compliance risk for SPACs that needs more attention.  The…

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A Difficult Picture for Anti-Fraud Today

fraud

The Association of Certified Fraud Examiners is holding its 2021 conference this week (virtually), and to that end the ACFE also just published its latest survey on anti-fraud budgets, resources, and challenges.  Suffice to say, anti-fraud and internal audit teams have had a busy year. More than half of all survey respondents said they’ve found…

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SPACs Draw Internal Control, Governance Concerns

SPACs

The Securities & Exchange Commission is stepping up its warnings about special purpose acquisition companies, with a new statement today walking through the internal control and governance concerns that SPACs and the private businesses they acquire are obligated to meet.  SPACs, also known as blank-check companies, are all the rage on the capital markets these…

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Headaches on ICFR and Better Tech

ICFR

My phone rang the other day, and on the line was my friend the tech vendor. He was calling to tell me about new whiz-bang software his firm is developing to identify internal control issues — and within a few minutes, we stumbled into a dilemma about effective internal controls that needs attention. Hear me…

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ICFR, Still Driving Companies Nuts

internal control

We have yet another report today depicting the tensions companies face when building internal control over financial reporting, including the enduring suspicion that many audit firms raise questions about internal controls simply to look good to the Public Company Accounting Oversight Board. The report, released Tuesday by Financial Executives International, interviewed 145 financial reporting executives…

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